Micro: Imperfect Competition Review Question Preview (ID: 51284)
A Unit Review Of Imperfect Competition.
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Non-price competition refers to:
a) Competition between products of different industries, for example, competition between aluminum and steel in the manufacture
b) Price increases by a firm that is ignored by its rivals.
c) Price wars resulting from a breakdown in price leadership.
d) Advertising, product promotion, and changes in the real or perceived characteristics of a product.
Economic analysis of a monopolistically competitive industry is more complicated than that of pure competition because:
a) The number of firms in a monopolistic competitive industry is larger.
b) Of product differentiation and consequent advertising activities.
c) Monopolistically competitive firms realize economic profits in the long run.
d) Monopolistically competitive producers use strategic pricing strategies to combat rivals.
Excess capacity refers to the:
a) Fact that firms produce more than the socially optimal output.
b) Fact that entry barriers artificially reduce the number of firms in an industry.
c) Amount by which actual production falls short of the minimum ATC output.
d) Fact that most monopolistically competitive firms encounter diseconomies of scale.
A perfectly price discriminating pure monopolist:
a) Produces less output than a non-price discriminating monopoly.
b) Produces the same output as a perfectly competitive industry.
c) Produces where MR=MC.
d) Charges a price which equals the buyer's marginal cost.
Product differentiation is a key characteristic of:
a) Purely competitive markets only.
b) Monopolistically competitive markets only.
c) Monopoly markets only.
d) All firms that make economic profit in the long run.
The pure monopolist's demand curve is relatively elastic:
a) In the price range where total revenue is declining.
b) At all points where the demand curve lies above the horizontal axis.
c) In the price range where marginal revenue is negative.
d) In the price range where marginal revenue is positive.
When a monopolistically competitive firm is in long-run equilibrium:
a) There is normal profit and price equals marginal cost.
b) They are productively efficient.
c) Production takes place at minimum ATC.
d) Marginal revenue equals marginal cost and price equals average total cost.
24. The demand curve in a perfectly competitive firm is ________; while the demand curve for a monopoly is ________.
a) Perfectly inelastic; perfectly elastic
b) Relatively inelastic; relatively inelastic
c) Down sloping; perfectly inelastic
d) Perfectly elastic; down sloping
20. Suppose you find that the price of your product is less than minimum AVC. You should:
a) Minimize your losses by producing where P = MC.
b) Maximize your profits by producing where P = MC.
c) Close down because, by producing, your losses will exceed your total variable costs.
d) Close down because total revenue exceeds total variable cost.
3. The marginal cost curve for a firm is representative of which curve for an industry?
a) Diseconomies of scale.
b) Equilibrium.
c) Demand.
d) Supply
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